Housing (photo: Edwin J. Torres/ Mayor's Office)
No matter who you are, these past two years have been difficult for New Yorkers across the state. The COVID-19 pandemic was not only a health crisis where we lost tens of thousands of our loved ones, but also an affordability crisis. Too many of our neighbors lost jobs, routines, social connections, and more. Hundreds of thousands were thrown into economic instability, made even more difficult by circumstances that predated the pandemic: the housing crisis.
Everywhere you look, it’s painfully obvious that our city’s housing ecosystem is on the brink. At the same time as property values in some neighborhoods approach unheard of highs, tenants in other neighborhoods contend with stagnant wages and rent increases beyond their means. All around us, new luxury developments are springing up while efforts to increase the supply of truly affordable housing — housing that working families can afford to rent or own — fail to live up to their promise and costs.
In a city as large and resource-rich as ours, no individual or family should have to confront the painful reality of being unable to afford a home. No one should be unhoused. No one should be forced to lose their home because it becomes exorbitantly overpriced or without good cause or justification. Everyone should be entitled to a safe and healthy home that is within their means to afford.
Conversations and advocacy around the housing affordability crisis in our city and state typically focus on limiting rent increases, preventing evictions, and the imperative to build more truly affordable housing. And these conversations, while incredibly important, don’t address all of the factors that contribute to a wildly astronomical housing market and drive out working- and middle-class families from neighborhoods all across our city. Any long-term solution to our housing crisis that truly gets to the heart of affordability should also take into account rising property taxes, one of the chief reasons for rent increases and a lack of new affordable housing.
Property taxes are usually only thought of as a part of a homeowner’s affordability calculus but they play a significant role in contributing to the lack of affordable rental housing in New York City. We live in a delicate housing ecosystem where one person’s rent payment is another person’s income, which becomes a mortgage payment, an insurance payment, a water bill payment, a property tax payment, and so on. This means when costs go up, it affects both tenant and owner alike. Simply put, exorbitant costs and property taxes levied upon us by the city push up the price of our rents.
Neighborhoods in and around my district are not immune to the effects of the city’s broken property tax system. I surveyed the public property tax records of 40 three- and four-unit buildings for the last four years across three southern Brooklyn neighborhoods: Bay Ridge, Bath Beach, and Sunset Park. Three-fourths of the buildings I surveyed had two or more consecutive years of at least 5% property tax increases. One building in Bay Ridge saw its property tax bill go up 19% over two years; another in Sunset Park saw a whopping 24% increase over three years; two in Bath Beach had nearly 20% increases over three years.
The inequities of our property tax system are real. They affect the affordability of our communities, for both homeowners and tenants, alike. Do these increases justify exorbitant 100% rent hikes, as we’ve seen in some parts of the city this past year? Of course not. But we can’t ignore the impact that property taxes have on the housing ecosystem, including how they affect rent prices, and especially in outer-borough communities. These costs, just like many of the other factors that go into housing expenses, need to be taken into account when we determine whether rents are fair and affordable, or not. Not taking all of these factors into account will just result in an ecosystem that is out of balance and without a sustainable financial underpinning.
In the remaining days of the state legislative session this year, there is a lot of advocacy in support of S3082, the Good Cause Eviction bill. In a nutshell, the bill would prohibit a landlord from evicting a tenant without good cause, and would allow a tenant the right to renew a lease. Failing to pay rent is good cause for an eviction, unless the tenant is not paying rent because the rent has been unreasonably increased. The bill establishes that a rent increase is presumed to be unreasonable if it exceeds 3% or 1.5x the annual rate of inflation as measured every August, whichever is greater. Broadly speaking, this bill would apply to apartments that are not rent-stabilized and not owner-occupied.
While I fully support the principle behind this bill - the idea that a tenant shouldn’t be evicted without good cause - and that rent increases should be reasonable and justifiable - I don’t think the calculation of what is or is not reasonable accurately reflects the true costs of housing. Linking increases to a factor of the inflation rate - or a flat amount of 3% - is a good step towards recognizing that housing costs inevitably go up. But those calculations don’t account for property tax increases, which in many cases bear no relation to inflation.
Looking at New Jersey, which is a model that many advocates point to in support of enacting the Good Cause Eviction bill, the law requires full consideration of all the expenses - and inversely, profitability - of a landlord in determining what is or is not reasonable.
Take 2019 as an example, when the annual inflation rate was 1.8%. Under the current Good Cause Eviction bill, rent increases up to 3% would be presumed reasonable (1.5x the inflation rate=2.7%, which is less than 3%). But in that same year, 30 out of the 40 buildings I surveyed had property tax increases greater than 6% alone. So while the presumed 3% increase would be used to pay for added costs associated with the housing market such as fuel, water, insurance, etc.,the total cost of the tax increases would be more than double what would be presumed to be reasonable.
Tenants absolutely need to be protected from unreasonable and unjustified rent increases. But any effort to protect tenants has to be done in a way that is financially sustainable to the underpinning of the totality of the housing ecosystem that we live in. In the absence of comprehensive property tax reform (which remains an incredibly important issue to resolve once and for all), it is important that our legislative efforts to rightfully protect tenants also balances these considerations. In the final days of the legislative session, I’m hopeful that we can strike the right balance. My position remains the same and I’m eager to find the solution that will make this work for everyone.
New York’s recovery means a thriving economy and an affordable place to live for working- and middle-class families. We must make our housing systems fairer and more affordable for all New Yorkers in the long-term, so homeowners and renters can stay in their homes and landlords can afford to cover their legitimate costs.
State Senator Andrew Gounardes represents parts of Brooklyn. On Twitter @agounardes.